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INTRODUCTION
INTRODUCTION
What is LOGISTICS?
Logistics is one of the oldest and also the newest activities of business
management. It involves combining diverse functions and service providers
who may be culturally and objectively different.
In the past, quality of products and services was the key
differentiating factor for companies operating in the same market. In due
course, quality and low cost became the winning combination.
A recent US study found that logistics costs account for almost 10% of
the gross domestic product. The process itself covers a diverse number of
functional areas. Involved in logistics are transportation and traffic, as well
as shipping and receiving. It also covers storage and import/export
operations.
The concept of logistics can be applied to specific areas of business.
Acquisition logistics, for example, covers everything involved in acquiring
logistics support equipment and personnel for a new weapons system for
the military. This includes identifying, designing, defining, developing,
producing, delivering and installing the new weapons system.
Many businesses that deal with supply of goods or services have their
own logistics department. For example, a company supplying photocopying
paper around the world will have a logistics team. The manager will oversee
or delegate to his staff the process from the point of origin. The team will
deal with the acquisition of paper from the paper supplier all the way to the
customer who requests the paper. The supplier and buyer may be located in
different countries.
It is the logistics team who must make sure that products can be obtained
at a reasonable price. They then have to make sure the product is shipped on
time and will arrive when expected. The logistics team also has to deal with
importing and exporting contracts, and possibly also with the customs
department. The process at times can be a lengthy one, but once in place
should run smoothly.
History of Logistics
Logistics Management
Software is used for logistics automation which helps the supply chain
industry in automating the work flow as well as management of the
system. There is very few generalized software available in the new
market in the said topology. This is because there is no rule to generalize
the system as well as work flow even though the practice is more or less
the same. Most of the commercial companies do use one or the other
custom solution.
GENESIS OF MODERN LOGISTICS
Logistics as a business concept evolved only in the 1950s. This was mainly
due to the increasing complexity of supplying one's business with materials
and shipping out products in an increasingly globalized supply chain, calling
for experts in the field who are called Supply Chain Logisticians. This can
be defined as having the right item in the right quantity at the right time at
the right place for the right price and is the science of process and
incorporates all industry sectors. The goal of logistics work is to manage the
fruition of project life cycles, supply chains and resultant efficiencies.
The term is used for describing logistic processes within an industry. The
purpose of production logistics is to ensure that each machine and
workstation is being fed with the right product in the right quantity and
quality at the right point in time.
The issue is not the transportation itself, but to streamline and control the
flow through the value adding processes and eliminates non-value adding
ones. Production logistics can be applied in existing as well as new plants.
Manufacturing in an existing plant is a constantly changing process.
Machines are exchanged and new ones added, which gives the opportunity
to improve the production logistics system accordingly. Production logistics
provides the means to achieve customer response and capital efficiency.
Production logistics is getting more and more important with the decreasing
batch sizes. In many industries (e.g. mobile phone) batch size one is the
short term aim. This way even a single customer demand can be fulfilled in
an efficient way. Track and tracing, which is an essential part of production
logistics - due to product safety and product reliability issues - is also
gaining importance especially in the automotive and the medical industry.
Logistics Management Process
The various processes and elements that are part of logistics as a discipline
are:
Before delving deep into logistics, a look at the current business scene will
be great help.
Scenario of Logistics in India
Today logistics management in India has become complex with about ten
million related outlets to cater to the needs of 1000 million people.
The logistics market in India is estimated to be Rs. 260,000 crores and
constitutes 13 per cent of the GDP. It is much higher than for the U.S. but
lower when compared to countries like China and Korea.